>From observation/experience (not looking at code) I think LMS does the
following order.

1. Apply Lossless Compress if possible.  Reason:  this maximises amount
of data in the player so that if there are network delays there is less
chance of rebuffering.  Buffer space is limited in older players and LMS
server processors and networks were slower when LMS was coded.  There is
no change in audio samples delivered to player DAC with lossless
compression.
2. Send data without conversion  Reason:  any conversion except lossless
compression will result in a change to the audio. 
3. Apply a conversion so the stream can at least be played i.e. format
conversion and/or rate conversion. Reason:  It is better to play some
audio rather than none.


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